he LTCI system in Japan was implemented in 2000 in order to provide coverage for long-term care services outside of the hospital setting where most of the formal care was being provided. Japanese policy makers had eliminated cost sharing for medical care for the elderly in 1973. Even though the copayment was reinstated in the early 1980s, hospitals were frequently being used as long term care facilities if a family member (traditionally the wife of the oldest son) was unable to provide the care. Coupled with the expansion of hospital supply, this policy led to an influx of “social admissions” – the number of frail elderly people admitted to the hospital without medical justification increased dramatically over several decades and the hospitalization rate in the elderly doubled, from 2 percent in 1970 to 4 percent in 1990 [24]. Length of stay averaged over 30 days, primarily because of these “social admissions”. This inappropriate use of hospital services was considered a serious problem considering the rapid aging of the population and the decreasing number of family caregivers [25]. Politically, the adoption of the LTCI system is the result of a decade-long process which began with the introduction of the “Ten Year Strategy to Promote Health and Welfare for the Elderly”, informally known as the “Gold Plan”. This firmly placed the issue of care for the frail elderly on the public agenda and provided grants to local governments to significantly increase the supply of long-term care providers according to set targets